Daycare and use of home

[Catherine]

Hi folks --

 

New client (mom of current client) started in-home daycare in 2008.  Prior returns show NO depreciation taken for the house.  Is this normal with daycare - or did they mess up?

 

I can get the valuation in 2008, I know the % of assessment due to land, I know 39-year nonresidential -- but do I need it at all?  (And if so then yes I'm looking at F3115 and a 481a correction).

[Margaret CPA in OH]

Whatever the final decision (and I would do the whole thing, but that's me), the client still must take into consideration the depreciation 'allowed or allowable' down the road.

[RitaB]

I have one with daycare in home, but it's confined to 35% of home, so I depreciate 35% of home. Even if it wasn't confined I'd be conservative on that because you know they're gonna sell that house somewhere down the road and the hairdresser didn't tell them about the 4797 part. Maybe decide the percentage based on hours the house is used for business.

[BulldogTom]

Can you use the safe harbor for Daycare?  I don't know that answer, but it is what I do for my schedule C's who can't get me good records.

 

Tom

Newark, CA

[Margaret CPA in OH]

I just looked at the Home Office Expense form (not instructions) and the options are Daycare or Simplified (Safe Harbor) Method or the actual. On 8829 there is more detail for daycare which includes used regularly for daycare, not exclusively. Then another input to multiply days time hours used for daycare. So maybe not so simple.